In a major crackdown on alleged misuse of federal funds, the US Department of Health and Human Services (HHS) has announced an immediate freeze on all childcare payments to the state of Minnesota. The drastic action follows serious allegations that millions of taxpayer dollars were funneled to fraudulent daycare centers over the past decade.
The Funding Freeze and Fraud Allegations
The HHS, in a strongly-worded statement, declared it has "turned off the money spigot" to Minnesota while it investigates the fraud. Officials referenced widespread reports that the state government directed substantial funds to sham childcare facilities. "You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade," the HHS statement noted.
Deputy Secretary Jim O'Neil elaborated on the social media platform X, revealing that the department has activated a new "Defend the Spend" system for all Administration for Children and Families (ACF) payments. Effective immediately, this new protocol mandates that all ACF payments across the United States must be accompanied by a justification and either a receipt or photo evidence before funds are released to any state.
YouTube Exposé Triggers Federal Action
The federal investigation gained momentum after a viral video by YouTuber Nick Shirley exposed glaring irregularities. Shirley visited a learning center in Minnesota that had reportedly received $4 million in state funds. The investigator found the center completely inactive, with a signboard that even misspelled the word "learning" as "learing."
In a tense encounter captured on video, a woman at the location yelled at Shirley not to open the gate, fearing he was from ICE (Immigration and Customs Enforcement). After Shirley identified himself as an online commentator, the woman told him, "Go away. You’re not welcome here. Shame on you." This footage provided visual evidence supporting the fraud claims.
Demands for Audit and Public Hotline
In his post, Deputy Secretary O'Neil stated that he and Alex Adams have identified individuals based on Shirley's investigative work. O'Neil has formally demanded Minnesota Governor Tim Walz to conduct a comprehensive audit of the implicated centers. The requested audit must include detailed scrutiny of attendance records, licenses, complaints, investigations, and inspection reports.
To gather more evidence, the HHS has launched a dedicated channel for reporting fraud. A dedicated fraud-reporting hotline and email address has been set up at https://childcare.gov. The department has urged parents, childcare providers, and members of the public to come forward with any relevant information. "Whether you are a parent, provider, or member of the general public, we want to hear from you," O'Neil added.
This sweeping action marks a significant escalation in federal oversight of childcare funding and sets a precedent for stricter accountability measures nationwide. The immediate impact on legitimate childcare providers and families in Minnesota relying on these funds remains a critical concern as the investigation unfolds.
